Shelling out $4 million of taxpayers money to buy an abandoned property and turn it into a women’s sober home – with no business plan for the program, zero expertise in the industry, and no clue how much it would cost to repair, insure, maintain and operate the facility on an annual basis – might sound like another insane local government decision.
Well, that’s exactly where the Indian River Hospital District trustees now find themselves.
The week before Christmas, the Hospital District purchased the buildings at 620 10th Street and 650 10th Street that at one time had been used by the Children’s Home Society as group housing for foster children.
The building, owned by Centennial Holdings of Orlando, had been carried on the tax rolls for the past decade as worth between $1.1 million and $1.2 million. While the “just” value placed on properties for tax purposes is generally quite a bit less than the real market value, 620 and 650 10th Street were put on the market for an extremely aggressive $4.1 million by the Fitzgerald Group, a Fort Lauderdale brokerage.
The sale closed on Dec. 19 for $4 million, with $200,000 credited back to the Hospital District as an allowance for repairs. The law office of the Hospital District’s outside legal counsel, Jennifer Peshke, served as the closing and escrow agent.
As this purchase exhausted the entire $3.8 million the Hospital District had realized from selling the taxpayer-owned Hospice House property to the Visiting Nurse Association in 2023, Vero Beach 32963 submitted a public records request to the Hospital District in an effort to learn more about the Women’s Sober Home Program.
On Jan. 17, two batches of documents, which district staff says is everything they have responsive to the records request, revealed there is no business plan for a woman’s sober home, no financial pro forma and no risk analysis prepared by the district for the project.
But according to Hospital District officials, that’s not a flaw.
The focus, they say, was solely on acquiring the property – not on getting into the nitty-gritty of how a women’s sober home might operate before investing taxpayer funds.
The Hospital District provided a Florida Department of Health plan booklet containing one line stating that, in general, Indian River County needed more substance abuse recovery facilities. But there was no written needs assessment produced by the district for a women’s sober home.
Hospital District Chairman Bill Cooney said he never questioned the need for such a program.
“It’s always been my impression that this is kind of a given that we have centers for men for alcoholism and drug abuse, we definitely would have a sober living center for women. To me this was a slam dunk,” Cooney said.
“I guess my process is you’d do that and you’d have a center, and once you have a center, then you’d develop a program,” he added. “The program would be the next step, otherwise it’s kind of putting the cart before the horse.”
Executive Director Frank Isele confirmed the buy-now, plan-later strategy, which pre-dated his employment with the district.
“The initial goal was to secure the property that would be appropriate for the program, and there was a lot of discussion about what that would look like, and securing that,” he said. “Now we’re at the point where we’re going to develop an RFP (for the program), and we’re going to work with an external consultant because, as I mentioned, we don’t have the expertise for that.
“Our goal was to secure the property. It’s a huge up-front expense, I know, a $4 million up-front expense, which we just saved the operator of a long-time need in our county,” he said.
“The trustees can decide what’s going to be the best fit for our needs in county. But again, our goal was not to be an operator in this,” Isele said.
Several members of the local drug addiction and recovery community did gather twice for ad-hoc committee meetings in the summer of 2023 to decide the county needed a women’s sober home, and minutes were taken.
What came out of that committee was a bullet-point menu of the types of recovery services and amenities the sober home could or should offer, and a one-page sample annual budget prepared by the founder of a nonprofit that operates “recovery communities” in Broward County.
That scenario, marked “DRAFT” in red, proposed half the sober home residents would be paying customers and half would meet Indian River County Hospital District criteria for indigent care.
It showed no rent being paid to the hospital district, but a quarter-million-dollar ongoing cost to taxpayers each year – either paid to the operator of the Sober Home for care of indigent women, or paid out as overhead for the facility.
Would that theoretical new quarter-million-dollar annual expenditure result in an increase in the Hospital District’s district’s property tax millage? Or would it take money away from one of the current existing 60-plus programs the Hospital District funds in whole or in part for children, vulnerable adults and the elderly? Who knows.
Trustee Karen Deigl was charged as the district’s designated negotiator on the real estate deal, along with Peshke and Realtor T. P. Kennedy of Alex MacWilliam Real Estate.
“It’s a wonderful program,” Deigl said of the concept of a women’s sober home.
“We were able to secure the building that fits the program perfectly,” she said. “It worked. It was great. I look forward to the process of securing the provider of the services.”
District staff said the process of developing an RFP for the program and repairing the building will take about six months.
Repairing the building?
The public records request produced two very detailed inspection reports totaling 100 pages on the two buildings at the 10th Street site behind Dyer Chevrolet, with lots of photos showing the many things that will need attention before women getting out of drug and alcohol rehab could start moving in.
With regard to the roofs at the two buildings – one 16 years old, the other 18 years old – the inspector said, “Budgeting for replacement is recommended in the near future.” There was no estimate on how much new roofs might cost.
The HVAC systems for both buildings were found to not be cooling as they should. The inspectors found significant plumbing, electrical, appliance and exterior issues, in addition to signs of moisture intrusion inside the buildings. All the showers in one of the buildings were capped off so none could be tested.
The inspection reports themselves are troubling, not so much because of what’s in them, but because the inspections were completed on Oct. 24 and Oct. 29. A 72-page mold inspection report and a 658-page Phase 1 environmental assessment report are both dated Nov. 15.
The Hospital District thus had all these reports early enough in the 60-day due diligence phase of the deal to have provided them to the entire board of trustees before they gathered on Nov. 19 for a chairman’s roundtable meeting and on Nov. 20. for their monthly business meeting.
But all the trustees, it turns out, had not been given a copy of these documents to review and contemplate if they wished to proceed on what was an “as-is” purchase.
They never got the chance to look at the inspection reports as a group and decide, “Do we still think it’s wise to invest taxpayer dollars in this property? Do we want to get repair estimates before moving forward? Do we really want to take all of this on?
The Hospital District did manage to get $200,000 knocked off the sale price for repairs, bringing the final number down to $3.8 million. But where that number came from remains a mystery.
There were no contractor estimates to correspond with the $200,000 figure.
Was the Hospital District so committed to the concept of opening a women’s sober home – and to this one “perfect” property – that backing out of the $4 million purchase was never a contemplated option?
That’s a question that deserves an answer.
